* Political deadlock in Hungary, Czech Republic
* Bonds down, tracking currencies
* Potential gains on other currencies limited by politics
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, March 27 (Reuters) - Emerging Europe currencies
eased on Friday, as global stocks ended the week in mixed form
and investors worried about political uncertainty in the Czech
Republic and Hungary that has hurt their currencies.
The Czech crown <EURCZK=> fell 0.4 percent against the euro,
while Hungary's forint <EURHUF=> and the Polish zloty <EURPLN=>
both dipped 0.5 percent.
Stocks in the region were also mostly down with Warsaw's
WIG20 <> blue chip index losing almost 1.5 percent and
Prague PX <> almost 1 percent.
Global equities have had a strong week, reflecting improved
appetite for risk that is good news for emerging markets, but
Asia markets dipped on Friday and the fall of governments in
Prague and Budapest have weighed on the regional mood.
In the Czech Republic, where Mirek Topolanek's government
resigned officially on Thursday, the main political parties said
they would push for early elections in the autumn while finding
a caretaker government until then. []
But dealers and analysts have said a protracted debate could
hurt the currency.
"Markets are looking for a quick solution," Raiffeisen Bank
currency dealer Ivo Prokop said.
Hungary's politics were thrown into turmoil on Saturday when
Prime Minister Ferenc Gyurcsany announced he would step down and
hand over his post in a constructive vote of no confidence
sometime in early April.
The Socialists, who rule in a minority, have held talks with
the liberal Free Democrats, their only potential ally, but their
initial choices either withdrew from contention or were rejected
by the liberals.
The two parties will resume talks on Friday and the Free
Democrats have urged a quick decision.
TRACKING POLITICS
Hungary was forced to reach out for IMF-led international
aid worth $25.1 billion last year to avoid a financial meltdown
and its economy is seen contracting by 4.5 percent this year.
Romania's leu <EURRON=> slipped on Friday, giving up some
gains made after it sealed a 20 billion euro IMF/EU aid package
on Wednesday. The deal also came with an IMF urging of western
banks to stick with investment in the country.
Late on Thursday, nine foreign owned banks operating in
Romania promised jointly to provide additional capital to their
units if needed. []
Worries over growth, financing and banks have hit emerging
Europe, but analysts view the Czech Republic and Poland's
economic fundamentals as stronger, making them less vulnerable
to the fallout of the global credit crunch.
Dealers said other currencies were guided by the political
situation in the Czech Republic and Hungary and could trade on
the political news stream out of Prague and Budapest.
"Other currencies have a problem with further appreciation
as it is strongly limited by political turmoil," one
Warsaw-based dealer said.
Bonds market in the region were weaker and dealers said
papers were tracking currency moves. In Poland markets were
bracing for the finance ministry to publish its second quarter
debt supply next Tuesday, which dealers said will guide prices.
Poland's finance minister has not offered to sell bonds
since the first week of March, while Hungarian markets remain
all but frozen and the Czechs have picked up the pace of
borrowing but at higher yields.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.21 27.11 -0.37% -1.68%
Polish zloty <EURPLN=> 4.582 4.561 -0.46% -10.19%
Hungarian forint <EURHUF=> 302.95 301.4 -0.51% -13.01%
Croatian kuna <EURHRK=> 7.445 7.472 +0.36% -1.07%
Romanian leu <EURRON=> 4.244 4.23 -0.33% -5.41%
Serbian dinar <EURRSD=> 94.4 94.54 +0.15% -5.21%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 228bps over bmk*
4-yr T-bond CZ4YT=RR -46 basis points to +217bps over bmk*
8-yr T-bond CZ8YT=RR -13 basis points to +310bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +414bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +358bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +305bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -20 basis points to +1063bps over bmk*
5-yr T-bond HU5YT=RR -54 basis points to +1007bps over bmk*
10-yr T-bond HU10YT=RR -45 basis points to +865bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0951 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets:
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World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index [].
(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz)
